Beijing ByteDance Technology, the operator of China’s largest news aggregator Toutiao, is investing 2 billion yuan (US$302.77 million) to subsidise creators of online short videos as it expects the format to soon dominate mobile screens of China’s 700 million smartphone users.

Zhang Yiming, founder and chief executive of ByteDance, announced the investment in Beijing on Saturday to help commercialise short videos.

He said it would enable “all content creators to make money and help top creators to make big money”.

The investment would be used to reward creators of high-quality video on Xigua Video, one of the major short-video platforms operated by ByteDance, said Zhang.

Apart from the investment, ByteDance said it would offer a string of new services to support content creators to make money, including a feature to allow users to shop while watching video online.

The move to use heavy investment to court content creators was part of ByteDance’s latest strategy to “go all in” as Zhang sees short-form video – less than 20 minutes in length – as the main format in which information would be presented and consumed in the future.

By leveraging artificial intelligence technologies to analyse readers’ habits and send them customised content, ByteDance has made Toutiao the go-to news app for 120 million Chinese users. Now it wants to use its AI strength on short videos. Apart from Xigua, which has more than 200 million users in China, ByteDance in early November acquired Musical.ly, one of the world’s most popular mobile platforms for short videos among teens, to extend its reach globally.

Young, tech-savvy consumers have shown growing interest to watch short-form videos on smartphones to fill in short breaks in the day between other activities. According to ByteDance, users spend an average of 70 minutes a day watching videos on the Xigua app.

Watchers of short-form videos are projected to surge 58.2 per cent to 242 million in China by the end of this year, according to a report released by the Chinese consulting firm iiMedia Research Group in April. By the end of 2018, that number is expected to reach 353 million, more than the current US population.

As users spend an increasing amount of time watching videos, advertisers are also willing to spend more. The potentially big market has made short video a new battlefield for China’s internet trio in 2017 – Baidu, Tencent Holdings and Alibaba Group Holding, the owner of the South China Morning Post.

The Hong Kong-listed Tencent said in February that it would pour 1 billion yuan to subsidise producers of original short videos this year. While video-sharing website Tudou, a subsidiary of e-commerce giant Alibaba, announced in May a scheme to reward the best 2,000 short videos, with 2 billion yuan in cash. Baidu, in April, invested in online video site Renren, which is dedicated to bringing overseas short videos to China.